Return on Invested Capital Calculator (ROIC)

Our Return on Invested Capital Calculator is easy to use for everyone. And gives immediate response to calculations.

EBIT – Earnings before interest and tax.
NOPAT – Net operating profit after tax.
ROIC – Return on Invested Capital

ROIC Calculator

Share This Calculator

Related Calculator

How to Use the (ROIC) Return on Invested Capital Calculator

The (ROIC) Return on Invested Capital Calculator offers a basic web-based concept that figures out how much the company makes on money spent on operations. Follow these steps to use the calculator effectively:

Step-by-Step Instructions
Input EBIT:
In the field labeled “EBIT (Earnings Before Interest and Taxes) ($)” type in the EBIT value for your company. In other words, this is the profit that your company reports, before deducting interest and taxes.

Input Tax Rate:
On the line titled “Tax Rate (%)”, enter the percentage at which your company pays effective tax. Say, if your tax rate is 30, then enter 30.

Input Equity:
Enter the total equity of your company in the field labeled ‘Equity ($)’ The owners’ interest in the company is the same value.

Input Debt:
In the field labeled “Debt ($)”, type in the total debt of your company. However, this includes all liabilities of the company toward creditors.
Calculate Invested Capital:

Freeing up the extra time that it would otherwise have taken to calculate the total invested capital (the sum of the equity and debt values you added) means that adding these fields will automatically run the “Invested Capital ($)” field. This is read-only and will auto-update.

What is Return on Invested Capital?

While talking about the earnings of any business or company, firstly we know how much money is involved and how much we get an earn. For this reason, ROIC is a metric to know how much return we get for our invested capital. Let us understand how to calculate ROIC now. To calculate ROIC we need to find first NOPAT (Net Operating Profit After Tax) and then divide NOPAT by invested capital. Our total equity and debt are invested capital. It means money that you put in to grow the business. Let’s take the example that if a company’s NOPAT is $50,000 and invested capital is $250,000, then ROIC will be 20%. That implies that the company has a return of 20% on its invested capital. This gives us an insider idea of how efficient and profitable the company is. Investing requires ROIC because, instead of telling you that a company is now profitable, ROIC tells you if a company is generating profits in the long run and if it’s going to continue doing so.

Return on Invested Capital calculation formula

The formula for calculating ROIC is -

$ROIC = (\frac{Net Operating Profit After Taxes (NOPAT)}{Invested Capital}) \times 100$

Here's a of the components and a step-by-step example calculation -

Components - Net Operating Profit After Taxes (NOPAT) - NOPAT represents the company's operating profit after deducting taxes but before deducting interest expenses. The formula for NOPAT is NOPAT=Operating Income×(1−Taxes) Invested Capital - Invested Capital is the total capital employed in the business, including both equity and debt. The formula for Invested Capital is : Invested Capital=Total Equity+Total Debt−Non-Operating Assets

ROIC Formula -
- $ROIC = (\frac{NOPAT}{Invested Capital}) \times 100$

ROIC Calculation Example

Example Calculation -

Get Financial Information -

Operating Income: $ 500,000

Taxes: $ 100,000

Total Equity: $ 2,000,000

Total Debt: $ 1,000,000
Non-Operating Assets - $ 200,000

Calculate NOPAT:

$NOPAT = $ 500, 000 \times (1 - \frac{$ 100, 000}{$ 500, 000}) = $ 400, 000$

Calculate Invested Capital:
Invested Capital=$ 2,000,000+$ 1,000,000−$ 200,000=$ 2,800,000
Plug in the Values into the ROIC Formula:
- $ROIC = (\frac{$ 400, 000}{$ 2, 800, 000}) \times 100 = 14.29 %$

Here in this example, the Return on Invested Capital (ROIC) is calculated to be 14.29% .

What is Invested Capital in ROIC?

Invested Capital refers to the total funds deployed by a company to support its core operations and generate revenue. It includes both equity and debt used for business activities. The formula for Invested Capital is:
Invested Capital = Total Debt + Equity − Cash and Cash Equivalents

Key components include:
Equity: We can have these contributions from shareholders or retained earnings.
Debt: Financing through loans, bonds, and other liabilities.
Cash Adjustments: Not to run your business solely on cash, not necessary for daily operation.
ROIC calculator is dependent on Invested Capital and Invested Capital being a financial base is essential to evaluate returns.

Difference Between ROIC vs. WACC

Return on Invested Capital Calculator (ROIC)

Aspect	ROIC	WACC
Definition	Measures the profitability of investments.	Measures the average cost of financing (debt and equity).
Formula	NOPAT/Invested Capital	Weighted sum of equity and debt costs.
Focus	Returns from investments.	Cost to maintain operations.
Relationship	ROIC > WACC indicates value creation.	ROIC < WACC indicates value destruction.
Purpose	Evaluates operational efficiency.	Determines the hurdle rate for investments.

Difference Between ROIC vs. ROCE

Return on Invested Capital Calculator (ROIC)

Aspect	ROIC	WACE
Definition	Measures returns on total invested capital.	Measures returns on all employed capital.
Formula	NOPAT/Invested Capital	EBIT/Capital Employed
Focus	Profitability from operational investments.	Profitability including long-term liabilities.
Cash Exclusion	Excludes excess cash.	Includes all assets and liabilities.
Use	Strategic decisions on investment efficiency.	Broader financial health assessment.